New 252-Day Low in Silver Futures

After surging more than 100% since the pandemic low, silver futures registered their first 252-day low (close) on 9/17/21.

Let's conduct a study to assess the forward return outlook for the commodity after similar instances. Our study will require silver to have increased by more than 100% on a 252-day basis and then identify the first 252-day low. To be clear, I measure the lowest low based on the close, not the lowest intraday low.

HISTORICAL CHART

HOW THE SIGNALS PERFORMED

The sample size is small. However, the pattern suggests that silver could bounce in the short term, after which the downtrend is likely to continue.

From a purely subjective point of view, I'm surprised precious metals are not performing better on a risk-off day for the equity markets.

Let's apply the silver signal dates to gold to see how the yellow metal performs.

HOW THE SIGNALS PERFORMED - GOLD FUTURES

The pattern for gold looks similar to silver, which should not be a surprise-a bounce followed by lower prices.